Tips & Special Topics
Multiple VA Loans- Is It Possible?
Added March 31, 2009
Many VA borrowers ask, “Can I get more than one VA loan?” The short answer is yes depending on the circumstances. A VA loan is an entitlement to those who are eligible. How much a VA-eligible borrower is entitled to for each loan varies. The general rule is a veteran can obtain a VA home loan up to 4 times the amount of the available basic and/or bonus entitlement.
The “basic” entitlement available to each VA-eligible borrower is $36,000 on loans of $144,000 or less. Every eligible veteran also receives “bonus” entitlement that is considered in excess of the $36,000 basic entitlement. Bonus entitlement kicks in only for loans over $144,000. Bonus entitlement is calculated by taking the annual Freddie Mac conforming loan limits for counties, multiplying them by 25% and then subtracting the basic entitlement of $36,000.
Example: ($417,000 x 25% = $104,250) - $36,000 = $68,250 bonus entitlement for 2009.
Technically there are no “loan limits” established for VA loans. However, there is a limit to the amount the VA will guarantee. For most counties, the maximum loan for which the VA will provide its guarantee is $417,000. For veterans living in a county with a limit of $417,000, maximum entitlement would be $104,250. It is often standard to use the basic and bonus entitlements in combination with each other.
It is also possible for a veteran to have extinguished his or her basic entitlement by having an open VA loan for (up to) $144,000, for example, but to still have the bonus entitlement of $68,250 to use for a purchase over $144,000 (provided the veteran occupies the home). In this example, the veteran could use the bonus entitlement to obtain a VA loan up to: $68,250 x 4 = $273,000.
In counties where the cost of living is higher, maximum guaranty amounts may be more, as indicated by the annual Freddie Mac county loan limits. The maximum guaranty is the amount the VA considers when figuring its bonus entitlement for each VA-eligible borrower.
County loan limits help VA-approved lenders figure how much a borrower is entitled to. And, purchase price is the other key part of the equation that makes each VA loan unique.
If a VA borrower has one loan, the VA guaranty is a simple calculation. However, calculating the VA guaranty for borrowers who desire to use the entitlement on, and finance, multiple properties can get complicated. Generally speaking, the VA guarantees 25% of each additional loan amount over $144,000 up to the maximum county limit for each VA-eligible borrower. There are many factors to be considered: There is the purchase price, of course. County loan limits must be taken into account. If the VA borrower has paid off a prior VA loan, that can also come into play. Entitlement can be restored as long as a VA loan is paid in full. Typically, if a VA loan has been foreclosed, the entitlement cannot be restored until the loss is repaid.
Examples can help VA borrowers understand how to figure entitlements for multiple VA mortgages. Here are several scenarios to consider;
- A VA borrower is already using $36,000 of his entitlement on a current loan and is purchasing another home for $470,000. The maximum loan the VA will guaranty in his county is $625,000.
$625,000 x 25% = $156,250 maximum VA guaranty
$156,250 - $36,000 = $120,250 available entitlement
$120,250 x 4 = $481,000 maximum loan amount for this borrower
Since the proposed loan amount is less than $481,000, the lender will receive an entitlement of $117,500 which is the full 25% VA Guaranty on his loan of $470,000, and a down payment should not be required.
- A veteran has used $105,000 of her entitlement on a prior loan which has been paid off and entitlement restored. She is purchasing a home for $395,000 where the county limit is $815,000.
$815,000 x 25% = $203,750 maximum VA guaranty
$395,000 x 25% = $98,750 entitlement on this loan
Since this borrower’s full entitlement has been restored, the proposed loan amount of $395,000 should be get the full 25% VA Guaranty with entitlement to spare, and a down payment should not be required.
- A veteran is using $27,500 of his entitlement on a current loan, and is purchasing a home for $320,000 where the county limit is $417,000.
$417,000 x 25% = $104,250 maximum guaranty
$104,250 - $27,500 = $76,750 entitlement available
$76,750 / $320,000 = 23.98% VA Guaranty on this loan
Since VA’s Guaranty will be less than 25%, a down payment will likely be required to meet lender requirements.
In certain cases, a subsequent VA loan is not possible. Here are two examples where the borrower would be unable to acquire a VA loan:
- A veteran is using $36,000 of her entitlement on a current loan, and is purchasing a home for $120,000 where the county limit is $417,000.
Since the loan amount is not over $144,000, this veteran’s bonus entitlement cannot be used. And, the VA Guaranty would be zero.
- A veteran has already purchased an $800,000 home with a VA loan where the county limit is $729,750. He wants to purchase another home for $350,000.
$729,750 x 25% = $182,437.50 Maximum Guaranty
$800,000 x 25% = $200,000 exceeds entitlement and down payment was required
Since this borrower has already exceeded his maximum VA loan entitlement, he is not eligible for another VA loan.
If a borrower exceeds his or her entitlement, a down payment is usually necessary. If the down payment is more than 3%, the veteran may want to consider the option of applying for an FHA loan where down payments are usually no more than 3%. For help calculating multiple VA loans and determining the best loan types for each borrower contact a
veterans loan specialist.
